Analysis of Individual Income Tax Compliance in China from the Perspective of Behavioral Economics

Abstract

As an essential theory for studying the decision-making of “actors,” behavior economics can effectively analyze the problem of individual income tax compliance from the perspective of taxpayers’ psychology, which is of great theoretical significance for improving taxpayers’ willingness to comply. From the prospect theory, endowment effect, and mental accounting, the 2018 individual income tax reform can help enhance the level of voluntary personal income tax compliance and strengthen the tax compliance level; maintaining tax publicity helps to increase habitual individual income tax compliance level, optimizing tax service helps to increase the level of cooperative individual income tax compliance. In the future, we can further optimize the design of individual income tax policies, intensify tax publicity, and improve the quality of tax services. In the future, we can further optimize the design of individual income tax policies, increase tax publicity, and improve the quality of tax services to increase individual income tax compliance.